Standard docs vs. differences state by state

A web service called UpCounsel tweeted a link this morning to a template confidentiality and inventions assignment document, so I thought I'd have a look.

The chief merit of the draft is that it's readable. That's important, particularly from the perspective of a company desiring to have enforceable written agreements with employees.

UpCounsel partial screenshotGenerally speaking, two businesses entering a contract will be presumed to have either equivalent bargaining power, or at least sophistication or the means to be informed about the document. With regard to contracts between a corporate entity and and individual employee, other laws and public policies kick in that give judges latitude to re-balance, you might say, the contract to not too egregiously disfavor the employee.

So to be able to say, look, the employee could read this and understand what it said, that's important.

The chief failings of the template follow, I think, from the template's aim to provide a "one size fits all" solution. It's designed to straddle the question of whether the person signing is an employee or contractor, and it's designed to be agnostic regarding the state in which the employee might be providing services.

Assignments of invention from consultants and from employees are not the same thing. Maybe I should say, the two situations have their own constraints and present their own opportunities.

I'll focus on just a couple differences that should follow from the employee/contractor distinction, as it pertains to an assignment of inventions.

A person in an employment relationship will have duties of loyalty and other common law presumptions that favor the employer, in terms of the employer's rights in work product; a bona fide contractor, on the other hand, should be presumed to have more autonomy in the relationship, which means the contractual assignment from a contractor will have to take more care to spell out what the deal is vis a vis the contractor's pre-existing IP.

That said, state statutes are expressly more protective of employees than contractors in another regard, which is the scope of the contractual assignment right. California, Washington and other states have specific notice requirements that, the law says, must be included in the employee inventions assignment contract. The UpCounsel template fails to deliver these required notices, and for that reason alone should not be used, at least not in the form presented.

The lesson I draw for this morning is this: we don't have a uniform national law that applies to all US businesses and their contractual relationships; we have 50 or more jurisdictions to deal with, and their differences. Lawyers have a vested interest in the mess, no doubt, but this current reality, at least in the near term, presents a real obstacle to the promulgation of industry template like this one from UpCounsel.


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